State and local court rules sometimes make default judgments much more likely. For example, when a person who allegedly owes a debt is told to come to court on a work day, they may be forced to choose between a default judgment and their job. I urge the CFPB to find practices that involve scheduling hearings at inconvenient times unfair, deceptive, and abusive, or inconsistent with 1692i.
Consumer attorneys occasionally advise their clients not to record unlawful communications due to state laws requiring both parties' consent for recording. The CFPB should require that debt collectors subject to the FDCPA impliedly consent to recording by consumers.
I had a particularly lousy experience with an abusive debt collector called Miracle Financial, working on behalf of Verizon Wireless to collect a debt I wasn't aware I had incurred and didn't believe I owed. The full account -- and dozens more from people leaving comments on my blog over the years -- is available at the supplied link.
Miracle said I had to speak to Verizon. Verizon said I had to speak to miracle. Short of going to court over a $50 debt, I had no options for resolving the situation. Meanwhile, Miracle's demeanor on the phone was abusive, and they promised to call every day for years unless I paid up. So I did.
It was an upsetting episode that left me feeling powerless--as if the whims (or mistakes) of corporate America dictated my financial liabilities, with no chance for appeal and potentially dire consequences for my credit rating. I'm very pleased to see the CFPB addressing these practices.
Verizon Wireless and Miracle Financial
When the wrong person is hauled into court, there is no dispute mechanism except to slog through the court system in front of a judge. I think there should be an efficient / effective way to be able to file a dispute with a NEUTRAL third party at the circuit court level that does not involve appearing before a judge. As it stands now in Illinois, it is the debt collector v. the alleged debtor/ wrong person (pro se) in a he said / she said. The lawyer is privileged and always presumed to be correct and truthful by the judge while the alleged debtor/wrong person is presumed to be lying, and /or trying to get out of something. Judges are not neutral third parties.
Why is it that debt collection agencies feel like litigation is needed? I have helped over 4.5 million people settle their accounts without ever using litigation. What the debt buying and collection industry needs to realize, is that most people want to pay their debts – and will if given an opportunity. When a customer is threatened with litigation they begin to panic, often times leading to bankruptcy. Once a bankruptcy occurs the customer ends up in FICO hell and all of the customer’s other creditors suffer the consequence caused by one litigation happy debt buyer.
The empirical data now conclusively proves the non-litigation collection model is more profitable than the litigation collection model. It is also safer and more profitable for the banks who sell loans. It is safer because it creates no bank exposure or risk for improper litigation by the purchaser of their debt and it is more profitable because non-litigation debt buyers can afford to pay the bank a higher price for the same distressed loans.
What is the true way to help someone who is deep in debt? It isn’t to sue them into oblivion but rather to offer them a way out of their predicament. This way out can be accomplished by helping them resolve their other obligations; helping them find new/better employment or providing them needed social services. Sometimes it is simple as just listening to their plight and offering them patient understanding.
The entire robo-suing; inadequate documentation, sewer service, mistaken identity problem involving 10 million lawsuits a year could be avoided simply and easily. If debt selling banks were persuaded not to sell loans to debt buyers who utilized a litigation collection model, these ills would be stopped overnight. This simple solution would end the living nightmare now suffered by more than 30 million American families.
Default judgements should not be allowed. In Arapahoe county (littleton, CO) it is well known that a landlord can get a judgement and evict a tenant even if their is no justification. Republican judges always side with the property owners at the tenants expense.
There should be only one credit bureau. They all contradict each other and it is a nightmare to get anything resolved. They should be highly regulated. This is an industry making money off making peoples lives miserable and ensuring no-one can get mortgages or loans. They are crippling the economy. They are in the pockets of the banks and big corporations.
I believe that many default judgments are because the Defendant/debtor does not know what to do. They cannot afford to retain an attorney and they do not know how to answer a complaint. I believe that if every "debt collection law firm" is required by the CFPB to provide a answer form with check boxes. Example to include check box 1 if you admit to the allegations in paragraph 1 of Plaintiff’s complaint. Check box 2 if you deny the allegations in paragraph 1 of Plaintiff’s complaint. Check box 3 if after reasonable investigation the defendant does not have sufficient information to form a belief as to the allegations in paragraph 1 of plaintiff’s complaint. Something so that the least sophisticated consumer has a chance at avoiding a default. It should also delineate of any filing fees necessary to be paid (varies by state) in order for the Defendant’s Answer to be accepted by the court.
In most states all that a debt collection law office needs to provide is a complaint. The average consumer has no idea what the difference is between a balance and a sum. they do not know how to calculate the interest and certainly do not know what is "legal" pursuant to state or Federal Credit Card Act limitations. The name of the Plaintiff may not even be recognizable to them. They just know that they owed some money and fell behind on bills. More times than not, they do not respond at all.
Bank of America, my mortgage holder, does NOT even allow a formal dispute to move forward. The past 12 months have been a continues headache with Bank of America. For example, our mortgage account have always been current, and never were we in Foreclosure status, nor even approaching default. However, every single month Bank of America reported to the three major credit bureaus that we were late. I've worked with their Military Liaison Officer on the resolution through phone calls, email messages, and formal letters but without success. Urgent Help/Assistance is needed for consumers to navigate and to resolve the problems that Bank of America is creating over simple and elementary issues of basic accounting procedures. Bank of America has the undue power of making reports to the credit bureaus which adversely affects the consumer. The Consumer lacks tools to challenge and fight back on Bank of America's abuse of power.
I can't comment on any of this, but it would seem appropriate for Federal law to establish a framework of requirements for states to meet. This would level the playing field for debtors and creditors in all states. and would provide an equal basis for states to proceed with adding or amending their own laws affecting debt collection lawsuits.
Telephonic pretrial-hearings can be scheduled in support of a consumer having to work; times set and or scheduled with a court representative could passify this issue.
The majority of the clients I work with try to settle their accounts. The main issue is that most of the collection companies will not provide the client with a letter of agreement until after the payment is made. They also will often wait weeks for a receipt. I have even had clients tell me that the company required a $10.00 payment for the receipt.
When you say that you have "exhausted all options", I am curious as to over how long of a period have you attempted to collect when you choose to file a suit? Hardships are not all the same and some hardships can last for a year or longer. As a consumer advocate I see very few creditors that are willing to do anything more than refer to CCC or reduce rates for a short period of time.
my in-laws had the same issue with BoA. They paid their mortgate EARLY every month and still were reported as late every month. This is tragic and ruined their credit. When these things happen it takes years for the credit to br repaired even though a collector reported the information falsely, incurracately, and repeatedly. BoA should be penalized HEAVILY for these infractions otherwise they just ignore consumers.
Sallie Mae shouldnt be able to send out notices claiming a debtor qualifies for a repayment plan with lower payments and then when the debtor calls they claim no such plan exist.
I am a clerk at a local city court. I am the civil clerk and I feel that debtors are treated extremely unfairly by debt collection laws. The Court cannot give legal advice so it is saddening to have to try and explain and console upset litigants who have no idea what they are in for. I think there should be more avenues for pro se litigants who cannot afford to retain a private attorney (which is 95 % of the litigants in my city). I can say that most people do not answer summonses because they either were not properly served or they just straight up do not care, or most often, do not understand the legalese. BUT, I do have to say that I get many litigants who call and ask what they do now that they are served. On the occasions that people do file answers, most of them are in letter form, not a "legal" verified answer. Most debt collection attorneys jump right on that and request a summary judgment. Our Court does not turn away letters, and we send a copy to the attorney and set the matter up for a pre trial conference with a judge or court attorney to help try to get both parties together to come to some sort of resolution. The Court does have to adhere to a scheduling policy for these conferences, but we are very flexible if a defendant has a scheduling conflict we try to accommodate them as best we can. When summonses are filed with the court, half of them have tons of information about the debt, others only have the amount due! I find that sometimes it's hard for litigants to obtain further proving documents from attorneys, even with the court telling them they have to. When entering default judgments, I take my time and examine the whole file, like comparing the contents of the summons/complaint and the default judgment submitted, re-checking the affidavit of service of the summons (to make sure the defendant had the legal time to answer the summons), and ensuring that attached to the default judgment is the proper documentation as to purchasing the debt, a non-military affidavit, etc. I also make sure that they are being charged the proper interest rate and court costs. The bottom line is that the debtors still do not have enough and/or sufficient laws to protect them, and the Court's hands are tied based on these laws, even if they wanted to help, they couldn't. I know the Court is to remain impartial, but in a small city, everybody knows everybody and sometimes it's hard to see these practices occurring.
I contacted the debt collection company and tried to make arrangements for payment of debt, the reason I could not pay my bills is my husband was laid off work and he had started a new job. I wanted to make payments of $100. a month, debt collectors said NO, so I said the most I could afford was $200 a month the said NO they wanted $1,000. a month. Now we have 4 children, a mortgage and utility payment, debt collection said $500 a month my husband brought home after taxes $1,100 twice a month. My mortgage is $1,300 per month not including utilizes so I told debt company that I couldn't pay. I always thought something was better than nothing and that a debt company would try to work with you. I learned that they won't work with you.
The courts should also mandate that if a debtor has reached out to the creditor in an attempt to negotiate the creditor must continue to try to reach a settlement rather than seeking judgment against the debtor. Also, the collection agency should not be able to add interest on top of debt that seek judgment for if the debtor agrees to pay since they will make a profit over what they paid the original creditor. Basically these so called "attorneys" (just another form of ambulance chaser in my book) are just forcing bankruptcies upon people who would be willing to work a deal and then they and the courts and the government are whining about what the bankruptcies do to the economy and the bottom line. Last time I checked even in a court of law you can't play both sides.
It might help to take a look at how debt collectors are compensated. I think, based upon people I know who have held such work, that collectors who receive their pay based on a commission are incentivized to abuse the consumer.
I do not think the CFPB's mission is to provide job security for the debt collection industry.
josephusmyer
1
State and local court rules sometimes make default judgments much more likely. For example, when a person who allegedly owes a debt is told to come to court on a work day, they may be forced to choose between a default judgment and their job. I urge the CFPB to find practices that involve scheduling hearings at inconvenient times unfair, deceptive, and abusive, or inconsistent with 1692i.
View this comment in the discussion thread
josephusmyer
2
Consumer attorneys occasionally advise their clients not to record unlawful communications due to state laws requiring both parties' consent for recording. The CFPB should require that debt collectors subject to the FDCPA impliedly consent to recording by consumers.
View this comment in the discussion thread
tjl
3
I had a particularly lousy experience with an abusive debt collector called Miracle Financial, working on behalf of Verizon Wireless to collect a debt I wasn't aware I had incurred and didn't believe I owed. The full account -- and dozens more from people leaving comments on my blog over the years -- is available at the supplied link. Miracle said I had to speak to Verizon. Verizon said I had to speak to miracle. Short of going to court over a $50 debt, I had no options for resolving the situation. Meanwhile, Miracle's demeanor on the phone was abusive, and they promised to call every day for years unless I paid up. So I did. It was an upsetting episode that left me feeling powerless--as if the whims (or mistakes) of corporate America dictated my financial liabilities, with no chance for appeal and potentially dire consequences for my credit rating. I'm very pleased to see the CFPB addressing these practices. Verizon Wireless and Miracle Financial
View this comment in the discussion thread
From_ill_annoy
4
When the wrong person is hauled into court, there is no dispute mechanism except to slog through the court system in front of a judge. I think there should be an efficient / effective way to be able to file a dispute with a NEUTRAL third party at the circuit court level that does not involve appearing before a judge. As it stands now in Illinois, it is the debt collector v. the alleged debtor/ wrong person (pro se) in a he said / she said. The lawyer is privileged and always presumed to be correct and truthful by the judge while the alleged debtor/wrong person is presumed to be lying, and /or trying to get out of something. Judges are not neutral third parties.
View this comment in the discussion thread
BillBartmann
5Why is it that debt collection agencies feel like litigation is needed? I have helped over 4.5 million people settle their accounts without ever using litigation. What the debt buying and collection industry needs to realize, is that most people want to pay their debts – and will if given an opportunity. When a customer is threatened with litigation they begin to panic, often times leading to bankruptcy. Once a bankruptcy occurs the customer ends up in FICO hell and all of the customer’s other creditors suffer the consequence caused by one litigation happy debt buyer. The empirical data now conclusively proves the non-litigation collection model is more profitable than the litigation collection model. It is also safer and more profitable for the banks who sell loans. It is safer because it creates no bank exposure or risk for improper litigation by the purchaser of their debt and it is more profitable because non-litigation debt buyers can afford to pay the bank a higher price for the same distressed loans. What is the true way to help someone who is deep in debt? It isn’t to sue them into oblivion but rather to offer them a way out of their predicament. This way out can be accomplished by helping them resolve their other obligations; helping them find new/better employment or providing them needed social services. Sometimes it is simple as just listening to their plight and offering them patient understanding. The entire robo-suing; inadequate documentation, sewer service, mistaken identity problem involving 10 million lawsuits a year could be avoided simply and easily. If debt selling banks were persuaded not to sell loans to debt buyers who utilized a litigation collection model, these ills would be stopped overnight. This simple solution would end the living nightmare now suffered by more than 30 million American families.
View this comment in the discussion thread
jfearon
6
Default judgements should not be allowed. In Arapahoe county (littleton, CO) it is well known that a landlord can get a judgement and evict a tenant even if their is no justification. Republican judges always side with the property owners at the tenants expense.
View this comment in the discussion thread
quino1974
7
Something must be done were criminal charges can be pursued if a collection agency continues to harass through phone calls and emails.
View this comment in the discussion thread
jfearon
8
There should be only one credit bureau. They all contradict each other and it is a nightmare to get anything resolved. They should be highly regulated. This is an industry making money off making peoples lives miserable and ensuring no-one can get mortgages or loans. They are crippling the economy. They are in the pockets of the banks and big corporations.
View this comment in the discussion thread
U.S. Marine
9
I believe that many default judgments are because the Defendant/debtor does not know what to do. They cannot afford to retain an attorney and they do not know how to answer a complaint. I believe that if every "debt collection law firm" is required by the CFPB to provide a answer form with check boxes. Example to include check box 1 if you admit to the allegations in paragraph 1 of Plaintiff’s complaint. Check box 2 if you deny the allegations in paragraph 1 of Plaintiff’s complaint. Check box 3 if after reasonable investigation the defendant does not have sufficient information to form a belief as to the allegations in paragraph 1 of plaintiff’s complaint. Something so that the least sophisticated consumer has a chance at avoiding a default. It should also delineate of any filing fees necessary to be paid (varies by state) in order for the Defendant’s Answer to be accepted by the court.
View this comment in the discussion thread
U.S. Marine
10
In most states all that a debt collection law office needs to provide is a complaint. The average consumer has no idea what the difference is between a balance and a sum. they do not know how to calculate the interest and certainly do not know what is "legal" pursuant to state or Federal Credit Card Act limitations. The name of the Plaintiff may not even be recognizable to them. They just know that they owed some money and fell behind on bills. More times than not, they do not respond at all.
View this comment in the discussion thread
SJDuPlessis
11
Bank of America, my mortgage holder, does NOT even allow a formal dispute to move forward. The past 12 months have been a continues headache with Bank of America. For example, our mortgage account have always been current, and never were we in Foreclosure status, nor even approaching default. However, every single month Bank of America reported to the three major credit bureaus that we were late. I've worked with their Military Liaison Officer on the resolution through phone calls, email messages, and formal letters but without success. Urgent Help/Assistance is needed for consumers to navigate and to resolve the problems that Bank of America is creating over simple and elementary issues of basic accounting procedures. Bank of America has the undue power of making reports to the credit bureaus which adversely affects the consumer. The Consumer lacks tools to challenge and fight back on Bank of America's abuse of power.
View this comment in the discussion thread
bonzarel
12
I can't comment on any of this, but it would seem appropriate for Federal law to establish a framework of requirements for states to meet. This would level the playing field for debtors and creditors in all states. and would provide an equal basis for states to proceed with adding or amending their own laws affecting debt collection lawsuits.
View this comment in the discussion thread
dmelendez@kscfcu.org
13
Telephonic pretrial-hearings can be scheduled in support of a consumer having to work; times set and or scheduled with a court representative could passify this issue.
View this comment in the discussion thread
Marlene
14The majority of the clients I work with try to settle their accounts. The main issue is that most of the collection companies will not provide the client with a letter of agreement until after the payment is made. They also will often wait weeks for a receipt. I have even had clients tell me that the company required a $10.00 payment for the receipt.
View this comment in the discussion thread
U.S. Marine
15
When you say that you have "exhausted all options", I am curious as to over how long of a period have you attempted to collect when you choose to file a suit? Hardships are not all the same and some hardships can last for a year or longer. As a consumer advocate I see very few creditors that are willing to do anything more than refer to CCC or reduce rates for a short period of time.
View this comment in the discussion thread
Sertas
16
my in-laws had the same issue with BoA. They paid their mortgate EARLY every month and still were reported as late every month. This is tragic and ruined their credit. When these things happen it takes years for the credit to br repaired even though a collector reported the information falsely, incurracately, and repeatedly. BoA should be penalized HEAVILY for these infractions otherwise they just ignore consumers.
View this comment in the discussion thread
brendandavis
17
Sallie Mae shouldnt be able to send out notices claiming a debtor qualifies for a repayment plan with lower payments and then when the debtor calls they claim no such plan exist.
View this comment in the discussion thread
lovem2013
18
I am a clerk at a local city court. I am the civil clerk and I feel that debtors are treated extremely unfairly by debt collection laws. The Court cannot give legal advice so it is saddening to have to try and explain and console upset litigants who have no idea what they are in for. I think there should be more avenues for pro se litigants who cannot afford to retain a private attorney (which is 95 % of the litigants in my city). I can say that most people do not answer summonses because they either were not properly served or they just straight up do not care, or most often, do not understand the legalese. BUT, I do have to say that I get many litigants who call and ask what they do now that they are served. On the occasions that people do file answers, most of them are in letter form, not a "legal" verified answer. Most debt collection attorneys jump right on that and request a summary judgment. Our Court does not turn away letters, and we send a copy to the attorney and set the matter up for a pre trial conference with a judge or court attorney to help try to get both parties together to come to some sort of resolution. The Court does have to adhere to a scheduling policy for these conferences, but we are very flexible if a defendant has a scheduling conflict we try to accommodate them as best we can. When summonses are filed with the court, half of them have tons of information about the debt, others only have the amount due! I find that sometimes it's hard for litigants to obtain further proving documents from attorneys, even with the court telling them they have to. When entering default judgments, I take my time and examine the whole file, like comparing the contents of the summons/complaint and the default judgment submitted, re-checking the affidavit of service of the summons (to make sure the defendant had the legal time to answer the summons), and ensuring that attached to the default judgment is the proper documentation as to purchasing the debt, a non-military affidavit, etc. I also make sure that they are being charged the proper interest rate and court costs. The bottom line is that the debtors still do not have enough and/or sufficient laws to protect them, and the Court's hands are tied based on these laws, even if they wanted to help, they couldn't. I know the Court is to remain impartial, but in a small city, everybody knows everybody and sometimes it's hard to see these practices occurring.
View this comment in the discussion thread
Bootsy
19
I contacted the debt collection company and tried to make arrangements for payment of debt, the reason I could not pay my bills is my husband was laid off work and he had started a new job. I wanted to make payments of $100. a month, debt collectors said NO, so I said the most I could afford was $200 a month the said NO they wanted $1,000. a month. Now we have 4 children, a mortgage and utility payment, debt collection said $500 a month my husband brought home after taxes $1,100 twice a month. My mortgage is $1,300 per month not including utilizes so I told debt company that I couldn't pay. I always thought something was better than nothing and that a debt company would try to work with you. I learned that they won't work with you.
View this comment in the discussion thread
MLegz13
20
The courts should also mandate that if a debtor has reached out to the creditor in an attempt to negotiate the creditor must continue to try to reach a settlement rather than seeking judgment against the debtor. Also, the collection agency should not be able to add interest on top of debt that seek judgment for if the debtor agrees to pay since they will make a profit over what they paid the original creditor. Basically these so called "attorneys" (just another form of ambulance chaser in my book) are just forcing bankruptcies upon people who would be willing to work a deal and then they and the courts and the government are whining about what the bankruptcies do to the economy and the bottom line. Last time I checked even in a court of law you can't play both sides.
View this comment in the discussion thread
Marian
21
It might help to take a look at how debt collectors are compensated. I think, based upon people I know who have held such work, that collectors who receive their pay based on a commission are incentivized to abuse the consumer. I do not think the CFPB's mission is to provide job security for the debt collection industry.
View this comment in the discussion thread